Are Digital-Only Health Systems On The Horizon?

Over the past few years, health systems have made increasingly large bets on digital health and telemedicine applications. The question is, now that COVID-19 has forced many of them to beef up their digital capabilities dramatically, can they leverage this experience to deliver virtual care more effectively?

To be sure, some are already making big bets on digital care management and delivery. High-profile efforts we’ve covered in Healthcare IT Today include the Mercy Virtual Care Center, a “hospital without beds” which focuses exclusively on telemedicine and remote monitoring, and the hybrid model rolled out by LifeBridge Health, whose virtual hospital service integrates with brick-and-mortar services by both treating patients online and routing them to appropriate levels of in-person care.

That being said, until recently few systems have followed in their footsteps, if for no other reason than, getting there isn’t cheap. (For example, Mercy apparently spent $54 million to launch its virtual hospital project in 2015.)

In the wake of the COVID-19 crisis, however, health systems have been forced to go digital whether they wanted to or not. In many cases, hospital IT departments have found ways to shift their infrastructure virtually overnight to meet the demands imposed by the pandemic and telehealth companies are cropping up everywhere.

Now that providers have seen how many services can be delivered effectively using virtual tools, they’ve begun to ask themselves whether it’s time to build a digital-first or even digital-only health system. After all, while digital models do eat into their profit margins by reducing the volume of high-margin elective procedures they provide, if that’s the way things are going they need to be prepared before someone else does it.

So what would that look like? According to an article published by executives with management consulting firm Oliver Wyman, a digital-first health system would own few or even no physical assets, which would allow it to pour money and effort into building a first-class consumer-friendly online care experience.

As the article notes, some services will be easier to deliver digitally than others. For example, providing urgent care consults online has become quite practical, especially as connected devices make it easier for providers to track patients’ status remotely.

It’s also quite feasible to deliver ongoing primary care services using telehealth tools. “The vast majority of visits can be performed digitally in various synchronous (phone, video) or asynchronous (email, text) modes even for high-need populations,” the article suggests.

Things get more complicated when it comes to specialty care, but not terribly. Most such services can be delivered digitally, other than perhaps the physical exams needed prior to a decision regarding a surgical procedure, the piece notes.

Meanwhile, when it comes to acute care, procedures, surgeries and laboratory testing, the best play might be to punt. The authors suggest that under this new model, health systems deliver all of these services via high-volume, low-margin subcontractors with strong local operations. The authors predict that future digital health systems will own only a very focused set of ambulatory procedural centers or possibly no physical assets at all.

In summary, the new digital-only/digital-first health system will wrap a slick, highly-usable interface around a bundle of core health services, many of which can be delivered online. By farming out the asset-intensive parts of the health system and capturing the data-driven tools and direct customer relationships, these systems stand a chance of providing much of the care that patients need without carrying the huge fixed costs health systems do today.

What makes this approach particularly compelling is that most health systems already farm out at least some of their diagnostic testing, imaging and ambulatory procedures. Now, with the virtual care experience from COVID-19 under their belt, they’re in a position to build on these relationships. Over the next year or two, we could see many more health systems make delivering virtual care at-scale a core part of their strategy.

About the author

Anne Zieger

Anne Zieger

Anne Zieger is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.